Whether you are a newly-minted entrepreneur or your business has been around for decades, proper succession planning can protect your legacy and keep your company running smoothly after you are gone. Even if you do have a plan in place, it is vital to carefully consider potential the outcomes and consequences of common mistakes. These tips and strategies from a business succession planning attorney can help you stay on the right track.
Create a Business Succession Plan Early On
Putting off creating a business success plan until an illness or retirement occurs is a recipe for disaster. The incapacitation or death of an owner can throw a business into chaos and lead to serious conflict among family members or other potential successors. Having a business lawyer in West Chester help you develop a framework for what will happen when that day comes can ensure you choose the right successors and make current and future day-to-day operations run more smoothly.
Develop a Formal Strategy
Many business owners make vague plans or informal arrangements for what will happen when they are no longer at the helm. Your business succession planning strategy needs to be specific and align with the goals of your business, including:
- Identifying key roles within your organization
- Job descriptions and the skills required for leadership roles
- Objective criteria for potential successors
- An ongoing performance evaluation strategy to assess potential candidates
Make sure to outline details about transitioning ownership of your business, which could include passing the torch to family members, selling your share of the business to partners, selling your company to an employee or neutral third party, liquidating the business, and selling its assets, or another arrangement specific to your situation.
Be Objective When Choosing a Successor
Playing favorites when choosing a successor is fairly common, especially in family businesses. Failing to objectively consider what is best for the business and who will help it grow can cause disharmony in the workplace and discourage employees from doing their best. To avoid putting unqualified candidates in essential positions or overlooking those who are better suited for those roles, seeking the counsel of an objective professional like a business lawyer is vital.
Consider Multiple Successors
Circumstances can change at the drop of a hat, so it is also critical to consider more than one successor for leadership roles in your organization. Identifying several well-qualified candidates, talking to them about advancement potential, and providing them with proper training will enable you to fill vacancies within your company as they arise.
Properly Value Your Business
Business valuation can be tricky. It can be easy to have an inflated sense of your business’s value, which can cause problems regarding succession. An objective way to value your business is to hire a business appraiser who can give you a clear sense of your business’ value and offer support if you decide to sell it.
These are just a few tips for creating an effective business succession plan. Our business contract attorneys and estate planning lawyers can take a comprehensive look at your circumstances and advise you on which options may work best for you.